Draft Taxation Determination
TD 92/D196 (Withdrawn)
Income tax: is withholding tax payable on the net dividend and/or interest component when an Australian resident trust makes a distribution to which a non-resident beneficiary is presently entitled?
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Please note that the PDF version is the authorised version of this draft ruling.This document has been Withdrawn.
FOI status:
draft only - for commentPreamble
Draft Taxation Determinations (TDs) represent the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO. |
1. Yes. Withholdng tax on dividend and interest income is payable on the net distribution by the trustee.
2. Subsection 128A(3) of the Income Tax Assessment Act 1936 provides that a trust distribution which includes a dividend and interest component, to which a non-resident beneficiary is presently entitled, is deemed to retain its nature in the hands of the beneficiary. Subsection 95(1) defines the net income of a trust estate, while suparagraph 97(1)(a)(ii) provides details of the entitlement of a non-resident beneficiary to a share of the net income of the trust.
Example:
J. Smith, a non-resident beneficiary is presently entitled to a distribution from the XYZ Family Trust of $4,500 as follows:-
Income | rent | 5,000 | |
interest | 2,000 | ||
Total income | 7,000 | ||
Expense against: Rent | 2,000 | ||
Interest | 500 | 2,500 | |
Net Trust Income | 4,500 | - net rental income 3,000 | |
net interest income 1,500 |
The trustee is liable to pay withholding tax on the beneficiary's share of the net interest income ie: 10% of $1,500
Commissioner of Taxation
29/10/92
References
ATO references:
NO BAN RS
Related Rulings/Determinations:
IT 2680
Subject References:
beneficiaries
trust distributions
withholding tax
Legislative References:
ITAA 95(1)
ITAA 97(1)(a)(ii)
ITAA 128A(3)
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